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2017 (12) TMI 1100 - HC - Indian LawsWhether the petitioner is jointly & severally responsible for the day to day conduct of the business of the accused No.1-Company-M/s Catmoss Retail P. Ltd. as alleged by the respondent No.1/complainant in the complaint under Section 138 NI Act? Held that - Instant is a case where the learned Magistrate has not gone into the depth of From-32, where the petitioner i.e., Mr. Nitin Chawla, was not even an existing Director of the Company at the time of issuance of the said cheques in question. The learned Magistrate has not gone into the depth of the cause of action arisen qua against the petitioner as the cheques in question were issued by the Managing Director, i.e. Mr. A.K. Chawla, of the Company and subsequently, there was no occasion of actus reus on the part of the petitioner. It is because of this reason he took the defence to the notice under Section 251 Cr.P.C. dated 21.08.2012 that he does not owe any liability as alleged in the said notice - The aforesaid facts on record only indicates liability if so there is, it could be of civil liability and not criminal liability qua against the petitioner, which could be put into motion under Section 138 read with Section 141 of the Negotiable Instruments Act. The impugned summoning order dated 10.12.2010 qua against the present petitioner is bad and the same is set aside - petition allowed.
Issues Involved:
1. Quashing of summoning order dated 10.12.2010. 2. Quashing of order dated 21.06.2014 by the Metropolitan Magistrate. 3. Determination of the petitioner's directorship and liability under Section 138 of the Negotiable Instruments Act, 1881. Detailed Analysis: 1. Quashing of Summoning Order Dated 10.12.2010: The petitioner sought to quash the summoning order dated 10.12.2010 issued by the Metropolitan Magistrate in response to a complaint under Section 138 of the Negotiable Instruments Act, 1881. The complaint alleged that the petitioner, along with other accused, had issued two cheques which were dishonored. The petitioner contended that he was not a director of the accused company, M/s Catmoss Retail Pvt. Ltd., at the relevant time, and hence, the summoning order was bad in law. The court observed that the learned Magistrate had not thoroughly examined the Form-32, which did not list the petitioner as a director at the time of cheque issuance. The court emphasized that summoning in a criminal case is a serious matter and must reflect the Magistrate's application of mind to the facts and law. Consequently, the summoning order was set aside. 2. Quashing of Order Dated 21.06.2014 by the Metropolitan Magistrate: The petitioner also challenged the order dated 21.06.2014, which dismissed his application for dropping proceedings against him. The application was based on the judgment in CRL.M.C. 2598/2012 (Urrshilla Kerkar vs. Make My Trip (India) Pvt. Ltd.) and the order dated 31.01.2014 in CRL.M.C. 506/2014. The court noted that the petitioner had presented evidence, including Form-32, showing he was not a director during the relevant period. The court found that the Magistrate had failed to consider this evidence adequately. Therefore, the order dated 21.06.2014 was also set aside. 3. Determination of the Petitioner's Directorship and Liability Under Section 138 of the Negotiable Instruments Act, 1881: The core issue was whether the petitioner was responsible for the company's day-to-day conduct and thus liable under Section 138 of the NI Act. The petitioner argued that he was not a director at the time of the cheque issuance, supported by Form-32 and other evidence. The court referred to the Supreme Court's judgment in National Small Industries Corporation vs. Harmeet Singh Paintal & Anr., which stated that only those in charge of and responsible for the company's conduct at the time of the offense could be held liable. The court found no evidence that the petitioner was involved in the company's operations or issued the cheques. The court also cited the judgment in Pepsi Foods Ltd. vs. Special Judicial Magistrate, emphasizing the need for careful scrutiny before summoning an accused. Consequently, the court held that the petitioner could not be held vicariously liable under Section 138 read with Section 141 of the NI Act. Conclusion: The court quashed both the summoning order dated 10.12.2010 and the order dated 21.06.2014 against the petitioner, finding no merit in the respondent's contentions. The petition was allowed, and all pending applications were disposed of accordingly. The court emphasized the importance of ensuring that criminal proceedings are not initiated without proper scrutiny and evidence.
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